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eProcurement Strategy


Government procurement estimated at Rs. 450,000 crore p.a. Public Procurement Policy. Lack of standardization in implementing procurement processes ... – PowerPoint PPT presentation

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Title: eProcurement Strategy

National e-Procurement Strategy Challenges in
Realization of the e-GP Vision Role of e-Bharat
S. Abbasi Director Department of Information
Technology Government of India
November 28, 2006
e-Bharat Inclusion of e-Procurement as MMP
  • Government procurement estimated at Rs. 450,000
    crore p.a.
  • Public Procurement Policy
  • Lack of standardization in implementing
    procurement processes
  • Low efficiency manual process,
    tracking/monitoring of order fulfillment
  • Transparency in procurement Priority Agenda
  • Lack of information on procurement spend at
    different levels
  • Multiple Registration for vendors by every
  • No performance tracking for vendors

Trends impacting public procurement
  • Growth in electronic delivery of government
  • Increased outsourcing
  • Increased procurement of services human capital
    vs. goods
  • Productivity gains using IT solutions
  • Increased purchasing leverage while enabling
    decentralization of procurement
  • Increased expectations for quality and timeliness
  • Increased budget pressures
  • Internationally e procurement being adopted\

E Procurement State of Play
  • DG SD has developed a e procurement solution
    which is available to all Central Ministries
  • 11 Services being provided
  • NIC has also recently developed a e procurement
  • Currently being tested would be made available
    to State Governments Central Ministries
  • Some States a number of CPSUs doing e
  • CVC has issued an advisory that e procurement for
    all major procurements would be done from 1-4-07

E Procurement State of Play
  • As per Apex Committee direction, advisory issued
    by DoE to all FAs to fix thresholds above which e
    procurement would be mandatory
  • Compliance of the advisory being monitored
  • 1st Jan 07 to be fixed as date from when all
    procurements would be done electronically by
    Central Ministries CPSUs
  • States would also be requested to adopt e

No Clear Definition of e Procurement
e-Procurement Value Chain/ Definition
Require centralization
Contract Management
May / may not be centralized
Indent Management
Catalogue based Procurement
Vendor Management
  • e-Procurement system is centralized with
    individual procuring departments/agencies having
    ownership of the procurement process
  • Value in centralizing e-Tendering (incl. Bid
    Process Management), e-Auctions, Catalogue-based
    Procurement and Vendor Management
  • Contract and Indent Management can be kept at
    individual departments discretion

Expected Outcomes from e-Procurement
Policy Issues (1 of 2)
  • A clear definition of what constitutes e
    procurement/ stages of e procurement
  • Legal acceptance of electronic means of
  • Dealing with independent departmental
    e-procurement initiatives
  • Use of PPP option for addressing issue of high
    initial capital investment and to ensure high
    service levels
  • Extension of NICs/ other e-procurement solution
    as a centralized system to other government
    deptts / agencies
  • Need for re-engineering of certain government
    processes to enable e-procurement
  • Willingness of states to embrace e-procurement
    and to what extent
  • Prevalence of parallel manual process

Policy Issues (2 of 2)
  • Need for high-level government guidelines for
    e-procurement addressing
  • Level at which e-procurement effort should be
    centralized (state / national)
  • Roles and responsibilities of vendors and
  • User adoption change management by both
    internal (government) and external (vendors)
  • Security and audit requirements (for data
  • What is required is a manual on e procurement

Vision is a compelling image of an achievable
future - Adapted from Laura Berman Fortgang
e-Procurement Value ChainIndent Management
  • The workflow involved in preparation of tenders
    is handled
  • This module is optional in the e-procurement
    value chain with individual procuring departments
    defining their indenting process
  • In works procurement, administrative approval and
    technical sanction are obtained in an electronic
  • In goods procurement, indent generation activity
    is done online
  • The end-result of the stage is taken as inputs
    for issuing the NIT
  • Interactions in this module happen among
    government personnel

e-Procurement Value Chaine-Tendering
  • Online Bid Process Management from publication of
    NIT until the award of contract
  • Download of tender documents, bids submission,
    opening of bids and publication of award notice
    are all done online
  • Technical bid evaluation is typically handled
    manually automating the activity requires a
    well-functioning contract management and
    supplier management modules
  • Most of the tendering activity is handled at the
    divisional level and above

e-Procurement Value Chaine-Auctions
  • There are two types of auctions forward and
    reverse auctions
  • In forward auctions, bidders quote such that
    price line goes upwards
  • In reverse auctions, bidders quote such that
    price line goes downwards
  • Reverse auctions hold relevance for government
  • Reverse auction is used in the government context
    mainly for purchasing standardized items
  • Government many use forward auctions for selling
    excess items
  • Auction may be used to select the L1 bidder after
    technically qualified bidders have been identified

e-Procurement Value ChainContract Management
  • The module holds relevance to works procurement
    and electronically handles all processes involved
    in post-contract awarding phase
  • Measurement book is maintained online and the
    workflow involved in making the payment to
    suppliers is also done online
  • By integrating the contract management module
    with e-Tendering module, technical bid
    evaluation can be automated
  • Requires IT infrastructure and networking
    capabilities at the sub-divisional levels
  • Partial implementation of the module could be done

e-Procurement Value ChainCatalogue-based
  • Relevant for goods procurement (e.g. MRO items)
  • Rate contract information is already posted
    online End users can place an order directly
    and goods are directly delivered to them
  • Payment modalities remain the same as it is in
    the manual system
  • Workflow involved in purchase authorization and
    payment is handled online
  • Online tracking of rate contracts usage helping
    better vendor negotiations
  • Requires good IT and networking infrastructure
    capabilities at the end-user level
  • First step for most developed countries
    e-procurement initiatives

e-Procurement Value ChainVendor Management
  • Maintains a database on the list of suppliers
    (incl. their infrastructure capabilities) found
    eligible to respond to government procurement
  • Blacklisting of suppliers is done in a
    centralized manner
  • Information about projects previously undertaken
    and currently handled by suppliers is stored
    along with their performance data
  • Customized module development required to suit
    the needs of government
  • Supplier data digitization and timely information
    update is a challenge
  • Inputs available in the module could be used for
    automating evaluation of pre-qualification
    criteria and technical-bid evaluation

Expected Outcomes
  • Enhanced transparency, monitoring and control in
    procurement process
  • Reduced cost of doing business for both
    government and suppliers
  • Documented savings of around 15-30 of
    procurement realized
  • Wider competition leading to price benefits and
    better quality procurement for the Government
  • Economies of scale through demand aggregation
  • Greater access to past procurement information
  • Streamlined integrated processes cutting across
  • Catalyst for procurement reforms

International Case Study
US Federal Government
  • Managed Administered by GSA Federal Technology
  • Uses the best technology available in the
    commercial space

Private Auctions (Reverse Auction)
  • Real-time dynamic price negotiations
  • Used for any procurement where price/performance
    tradeoffs can be easily evaluated
  • Aggregation mechanism used for procuring

Quick Quote
  • Issue of RFQ and receipt of quotes
  • Shopping cart feature - Ease of moving multiple
    items to private auction for procurement
  • Used to procure complex hard to find services
    direct procurement goods

State of North Carolina, USA
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